Arthur Hayes, a big name in crypto (former BitMEX CEO), thinks Bitcoin might take a tumble before skyrocketing. He shared his thoughts in a new essay, outlining when he thinks it’s a good time to buy.
The Warning Signs
Hayes feels a sense of unease about the current financial situation, similar to what he felt right before the crypto market crashed in late 2021. He’s worried about things like central bank actions, credit expansion, and the relationship between treasury yields, stocks, and Bitcoin’s price. These factors are giving him a bad feeling, suggesting a potential market downturn.
Hayes’s Bitcoin Buying Strategy
Hayes doesn’t think the overall bull market is over, but he predicts Bitcoin could dip to around $70,000-$75,000 before a big rally to $250,000 by the end of the year.
His investment firm is holding onto Bitcoin but is also increasing its stablecoin holdings. This lets them buy more Bitcoin if the price drops below $75,000. He sees this as a way to preserve capital for when the market really crashes.
He also has a second scenario: If Bitcoin breaks through $110,000 with strong volume, he’ll buy more Bitcoin at that higher price.
Why a Dip Might Happen
Hayes believes major central banks (the US Federal Reserve, the People’s Bank of China, and the Bank of Japan) are tightening their monetary policies. This could cut off the speculative money that’s fueled both stocks and crypto recently.
He’s particularly focused on the US, suggesting that a rise in 10-year Treasury yields (maybe to 5-6%) could trigger a bond market sell-off, impacting stocks and, consequently, Bitcoin. He also points to the political tension between Trump and the Fed, suggesting a potential scenario where a mini-financial crisis could force the Fed’s hand into more money printing.
China’s recent policy shift away from bond buying also plays a role in his analysis.
Bitcoin’s Short-Term Correlation with Traditional Markets
Hayes acknowledges that Bitcoin is often seen as a unique asset, but he points out its current correlation with traditional markets. He believes Bitcoin might act as a leading indicator: if bonds and stocks fall, Bitcoin might fall first. Once authorities intervene with more stimulus, Bitcoin could bounce back quickly.
It’s All About Probabilities
Hayes emphasizes that he’s not predicting the future with certainty. He’s focusing on probabilities and risk management. His hedging strategy is about maximizing expected value, even if it means missing out on some potential gains. He wants to be ready to scoop up cheap altcoins during a major market crash.
At the time of writing, Bitcoin was trading at around $102,530.
